Bumi Armada Bhd. : Neutral assessment on price but strong on fundamentals

Bumi Armada Bhd. relative valuation is now NEUTRAL. It was previously rated OVERVALUED, and has a fundamental analysis score of 72.

Our analysis is based on comparing Bumi Armada Bhd. with the following peers – Hyundai Merchant Marine Co., Ltd, Nippon Yusen Kabushiki Kaisha, Shipping Corporation of India Limited, Neptune Orient Lines Limited, Mitsui O.S.K.Lines,Ltd., Adani Ports & Special Economic Zone Ltd. and China Shipping Container Lines Co. Ltd. Class A (011200-KR, 9101-JP, 523598-IN, N03-SG, 9104-JP, 532921-IN and 601866-CN).

Relative Valuation

Bumi Armada Bhd. is currently neutrally valued, as its previous close of MYR 1.25 lies within the CapitalCube estimate range of MYR 0.73 to MYR 1.26. Over the last 52 week period, Bumi Armada Bhd. has fluctuated between MYR 0.98 and MYR 2.26.

Relative Valuation

Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • Bumi Armada Bhd.’s current Price/Book of 1.05 is about median in its peer group.
  • The market expects 5210-MY to grow faster than its peers and for the company to improve its current ROE.
  • 5210-MY‘s relatively high profit margins are burdened by relative asset inefficiency.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • Over the last five years, 5210-MY‘s return on assets has declined from above median to about median among its peers, indicating declining relative operating performance.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • Compared with the peers chosen, 5210-MY has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • 5210-MY seems to be constrained by the current level of debt.

Investment Outlook

Bumi Armada Bhd. has a fundamental score of 72 and has a relative valuation of NEUTRAL.

Bumi Armada Bhd. appears on the top right hand quadrant of CapitalCube’s Value – Price Matrix. We classify this as ‘Safety’. In other words, Bumi Armada Bhd. has a relatively high Fundamental Analysis score of 72, while being potentially overvalued and trading higher than its CapitalCube Implied Price of 1.00. There might be some safety in this stock where it’s fundamental strength perhaps justifies its relatively higher price.

Fundamentals Vs Relative Valuation

Quadrant label definitions. Hover to know more

Safety, Value Play, Value Trap, Speculative

Drivers of Valuation

The market expects improvement in 5210-MY‘s current performance

The market expects more growth from 5210-MY than the median of its chosen peers (P/E of 32.45 compared to peer median of 20.32) and to improve its current ROE of 3.95%.

The company’s current Price/Book of 1.05 is about median in its peer group.

Valuation Drivers

Quadrant label definitions. Hover to know more

Outperforming, Harvesting, Challenged, Turnaround

5210-MY has maintained its relatively high P/E profile from the recent year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Bumi Armada Bhd. provides international offshore oilfield services. The company operates through the following business segments: Floating Production Storage and Offloading, Offshore Support Vessels, Transport and Installation, Oilfield Services and Gas Development and Technology. The Floating Production Storage and Offloading segment owns and operates FPSO vessels that are used for receiving hydrocarbons sourced from remote oil fields. The Offshore Support Vessels segment owns and operates a fleet of vessels comprising anchor handling towing support vessels, safety standby vessels, utility vessels, and accommodation workboats/work barges to provide support for exploration, development and production activities in the offshore oil and gas industry. The Transport and Installation segment provides pipelay, heavy lift, subsea umbilical riser and flow lines, and mooring installation. The Oilfield Services segment offers services in the exploration, development, and production and abandonment phases of the marginal oil field/brown field projects. The Gas Development and Technology segment explores opportunities to provide floating storage regasification unit and floating liquefied natural gas (FLNG) solutions. The company was founded on December 12, 1995 and is headquartered in Kuala Lumpur, Malaysia.


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